JPMorgan Said to Be in Talks to Buy Remainder of Cazenove Stake

JPMorgan Said to Be in Talks to Buy Remainder of Cazenove Stake


Nov. 16 (Bloomberg) -- JPMorgan Chase & Co., the U.S. bank that remained profitable during the financial crisis, is in talks to buy the half of Cazenove Group it doesn’t already own for about 1 billion pounds ($1.7 billion), said a person familiar with the matter, helping expand its business in Europe.

The price equates to about 530 pence a share, said the person, who declined to be identified because negotiations are still in progress. The proceeds will be split among Cazenove’s 1,500 shareholders and a deal is likely to be announced before the end of this month, the person said.

“This makes sense from a geographic diversity and a revenue diversity perspective,” said Douglas Ciocca, managing director at Renaissance Financial Corp. in Leawood, Kansas, which manages $1.9 billion, including shares of New York-based JPMorgan. Cazenove will help deepen the bank’s international client relationships and provide steady income, he said.

JPMorgan forged its venture with London-based Cazenove, whose clients include Queen Elizabeth II, in November 2004 to improve its relations with corporate clients. JPMorgan Chief Executive Officer Jamie Dimon, 53, led the No. 2 U.S. bank to a $3.6 billion third-quarter profit and has completed deals while rivals including Morgan Stanley and Citigroup Inc. had losses.

In June, JPMorgan bought the majority of the shares of New York-based hedge fund Highbridge Capital Management LLC it didn’t already own after co-founder Henry Swieca announced his departure. The bank completed the purchase ahead of schedule.

JPMorgan Cazenove Holdings has reported profits every year since it began, even as markets crumbled in 2007 and 2008. Cazenove gained this year as European companies raised $108 billion in rights offerings amid a dearth of mergers.

HSBC, Rio Tinto

The firm advised on HSBC Holdings Plc’s record 12.5 billion-pound fundraising in April and mining company Rio Tinto Group’s $15.1 billion-pound offer in June, which propelled JPMorgan to the No. 1 rank among advisers on European rights offers, according to data compiled by Bloomberg. The firm is advising Lloyds Banking Group Plc, Britain’s biggest mortgage lender, on a planned 13.5 billion-pound rights offering.

The firm also worked with insurer Friends Provident Group Plc on its 1.9 billion-pound takeover by Clive Cowdery’s Resolution Ltd. in August and Xstrata Plc on a planned 29.2 billion-pound merger with Anglo American Plc. Xstrata in October ended the deal to create one of the world’s largest mining companies five months after Anglo American rejected the offer.

The joint venture was among the first deals arranged by William Winters after taking over as co-CEO of JPMorgan’s investment bank in early 2004. Dimon ousted Winters, 48, in September.

Under the terms of the joint venture, after five years, JPMorgan had an option to buy the remaining half from Cazenove, and the U.K. broker had the right to sell to JPMorgan. The companies have until February to exercise their options.

Mayhew’s Payout

David Wells, a London-based JPMorgan spokesman, and Cazenove spokeswoman Tessa Murray declined to comment. The pending transaction was reported yesterday by the Sunday Telegraph and the Sunday Times in London.

Eighty Cazenove partners will split about 650 million pounds, the Sunday Times reported, without specifying where it obtained the information. Chairman David Mayhew may earn as much as 20 million pounds in the deal, the Times said.

JPMorgan’s investment bank had third-quarter revenue of $2.86 billion from Europe, the Middle East and Africa, according to a regulatory filing. Total net revenue for the unit was $7.51 billion.

JPMorgan paid 110 million pounds to Cazenove executives and investors and pumped 50 million pounds into the venture when it started. Cazenove also contributed 50 million pounds.

The firm was founded in London by the Cazenove family, who were descendents of French Hugenots in 1819, according to the company’s Web site.

Cazenove stock isn’t publicly traded.

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